You are a senior risk manager at a global investment bank. Your company has announced to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are a senior risk manager at a global investment bank. Your company has announced to its shareholders a target share of a major market that is significantly higher than your current share of that market. One of your most important customers in this market has asked for a risk exposure limit that is 2.5x your normal risk exposure limit given this customer's financial position. The relationship officers assigned to the company have recommended that the increased limit be approved. In this request, they have the support of their senior managers, who add that approving the request from such an important customer will go a long way to reaching the company's market share target, and along with it, bigger bonuses for the bank's employees. In addition, the bank's earnings will likely be higher and the bank's price should rise, as well. They also note that the bank has previously gone beyond its normal limits for this customer, and has been rewarded with timely returns to normal limits, as well as with additional business. For its part, the customer has suggested that other banks are more than willing to give it what it wants if your bank does not. However, and as noted, the current request is for a much bigger extension beyond the normal risk limits than in the earlier cases. The earlier limit extensions did not reach your level because they were considerably smaller than the current request. You have the power to grant final approval or rejection to this request. What would you do, and why? In answering the "why" part, please discuss the positives and negatives of approving or rejecting the request, and what factors were most important in reaching your decision. You are a senior risk manager at a global investment bank. Your company has announced to its shareholders a target share of a major market that is significantly higher than your current share of that market. One of your most important customers in this market has asked for a risk exposure limit that is 2.5x your normal risk exposure limit given this customer's financial position. The relationship officers assigned to the company have recommended that the increased limit be approved. In this request, they have the support of their senior managers, who add that approving the request from such an important customer will go a long way to reaching the company's market share target, and along with it, bigger bonuses for the bank's employees. In addition, the bank's earnings will likely be higher and the bank's price should rise, as well. They also note that the bank has previously gone beyond its normal limits for this customer, and has been rewarded with timely returns to normal limits, as well as with additional business. For its part, the customer has suggested that other banks are more than willing to give it what it wants if your bank does not. However, and as noted, the current request is for a much bigger extension beyond the normal risk limits than in the earlier cases. The earlier limit extensions did not reach your level because they were considerably smaller than the current request. You have the power to grant final approval or rejection to this request. What would you do, and why? In answering the "why" part, please discuss the positives and negatives of approving or rejecting the request, and what factors were most important in reaching your decision.
Expert Answer:
Answer rating: 100% (QA)
The limit should be accepted because of the following positive reasons Its past experiences ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date:
Students also viewed these accounting questions
-
You are a senior manager responsible for overall company operations in a large courier company. Your company has 106 regional offices (terminals) scattered around the country and a main office (hub)...
-
You are a senior manager at MegaMac Inc. All senior managers and the board of directors are scheduled to meet next week to discuss some questionable manipulations of earnings that were found by the...
-
You are a senior manager at Giganto Inc. All senior managers and the board of directors are scheduled to meet next week to discuss some questionable manipulations of earnings that were found by the...
-
You are appraising a three-year-old, single-tamily residence. The total square footage of the livable area is 2,500. The garage is 500 sq. ft. According to figures obtained from a cost-estimating...
-
Alex Franks was staying at a Comfort Inn in Searcy, Arkansas, while working on a highway project. He checked into the hotel on Monday, September 10. Two days later, after he had checked out and...
-
Think about your activities over the last week. Identify two exchanges or transactions for which the cost incurred would be measured in dollars and two that were nonmonetary.
-
Draft elevator speeches for Greenpeace, Planned Parenthood, March of Dimes, and the American Institute of Certifi ed Public Accountants (AICPA).
-
Zenith Consulting Co. has the following accounts in its ledger: Cash, Accounts Receivable, Supplies, Office Equipment, Accounts Payable, Common Stock, Retained Earnings, Dividends, Fees Earned, Rent...
-
Coronado Corporation owns machinery with a book value of $566000. At fiscal year-end 2026, is estimated that the machinery will generate future cash flows of $615000. If the machinery has a fair...
-
1. Do you think Frieds hiring methods are reasonable? Will they lead to good hires for his growing company? What are the best features of his approach (if you believe there are any)? 2. Do you think...
-
1. The Balance sheet and Income statement per U.S. GAAP and IFRS need to provide comparative information to the users of these financial statements. Per US GAAP, the Income statement needs to...
-
List the steps of data wrangling and explain what is done in each step.
-
A production line must produce 1,500 units every 4 hours of operating time. What is its cycle time in seconds?
-
A production line is to be designed to assemble a product. The assembly of this product requires three tasks, one of which requires 0.3 minutes to complete, one of which requires 1.4 minutes to...
-
(a) Distinguish between 'non-controllable' and 'controllable' risk. (b) Explain briefly the components of non-controllable and controllable risk.
-
Why would sustainability alone not necessarily guarantee the survival of an organization?
-
Quarter Machine-Hours Utility Costs Quarter 1 105,000 $ 255,000 Quarter 2 60,000 190,000 Quarter 3 95,000 240,000 Quarter 4 110,000 300,000 Quarter 5 75,000 210,000 Quarter 6 100,000 280,000 Quarter...
-
Determine the center and radius of each circle. Sketch each circle. 4x 2 + 4y 2 9 = 16y
-
The company had 10,000 shares of $1 par common stock outstanding. When each share of stock had a market value of $130, the company decided to reduce the price per share of stock to $65 by doubling...
-
Assume that $140,000 of Denham Springs School District 8% bonds are sold on the bond issue date for $128,598. Interest is payable semiannually, and the bonds mature in 15 years. The purchase price...
-
Total wages and salaries for the month of January were $50,000. Because it is January, no employee has yet reached the FICA tax cap amount, so the full FICA tax percentage is applicable to the entire...
-
Parker Hannifin Corporation, headquartered in Cleveland, Ohio, manufactures motion control and fluid system components for a variety of industrial users. The firm's financial statements contain the...
-
Cash larceny involves the fraudulent stealing of an employer's cash. These schemes often target the company's bank deposits. The fraudster steals the money after the deposit has been prepared, but...
-
Describe the four types of data analytics.
Study smarter with the SolutionInn App